Maximizing Car Rental Programs for Free Rental Days

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Between loyalty programs of their own, partnerships with airlines and hotels, and various promotions with pages and pages of fine print, maximizing car rental awards is a tricky business, so we asked TPG contributor Jason Steele to look at the major car rental companies and how to leverage points, miles and credit cards to get the most out of them.

While there are many ways to earn points and miles from renting a car, it is much more difficult to use points and miles to pay for a rental, and each of the major rental companies has a unique loyalty program that requires careful study and strategizing in order to maximize.

THE MAJOR PROGRAMS AND EARNING FREE RENTAL DAYS

Most of the major rental car companies offer some sort of loyalty program, but their systems are quite primitive in comparison to the airlines and hotels. Although many of these programs are designed for businesses, there is no reason that individuals or families can’t register and earn points.

Alamo: Offers no loyalty program at this time.

Avis Corporate Awards: One free rental after 15 rental days, for any car class up to a full size. New members receive a sign-up bonus of 5 points, double points for the first 90 days, and complimentary Avis Preferred membership.

Avis First: This is available by invitation only to those who rent 35 days within a calendar year. Members earn points instead of frequent flyer miles and receive one weekend day for every four rentals of two or more days each.

Budget Business Program: Members earn $3 worth of credit per rental day towards $15 discount certificates. A maximum of seven certificates ($105) can be redeemed for one rental.

Enterprise Plus: One point is earned per dollar spent on the base rate exclusive of taxes and fees. Free rental days start at 400 points and vary based on the dates and vehicle class. 10-20% bonus points are earned for different tiers of their elite program.

Hertz Gold Plus: Perhaps the most sophisticated program. Customers earn one point per dollar spent on the base rate, but since taxes and all other fees are not included, this could be less than half of the total cost in many cases. Weekend day award redemptions start at 500 points for an economy car, and like many airlines, there are two redemption tiers depending on availability. Specialty vehicle redemptions can cost thousands of points. Keep in mind that Gold Plus points are earned instead of airline miles.

National Emerald Club: According to their program terms, “One credit per qualifying rental or one credit for every four consecutive rental days. Valid for rentals in the US or Canada only. Example: One rental lasts 8 days = 2 credits. One rental lasts 2 days = 1 credit. “ My reading is that a 1-7 day rental earns one credit and an eight day rental earns two. Fortunately, only 7 credits are needed for a free day by most members, and 5 or 6 credits are needed for elite members. Their current promotion, One Two Free offers a free rental day after two paid rentals until January 31st, 2013. A maximum of three free rental days can be redeemed per rental but all discounts, taxes, and fees are excluded.

Besides using the rental car companies’ own formulas, one way to redeem a rental car award is through a credit card rewards program. Here is a summary of the major programs and how many points each requires for redemptions or certificates.

Through Membership Rewards you can get an eCERTIFICATE for Avis, Enterprise and National.

American Express Membership Rewards: Amex offers three low-value options for rental car rewards. Avis, Enterprise, and National car certificates are available at a redemption rate of 1 cent : 1 point. What’s worse is that these certificates are only valid for the base rate and you will have to pay cash for all taxes and fees. Cardholders also have the option to book a car with most companies through Amex’s travel agency and pay with points at one cent per point.

Chase Ultimate Rewards: Cardholders can book rental cars directly through Chase’s Ultimate Rewards online travel agency. I have found their search engine to be equal to or better than other online travel agencies, but it is not possible to book a one-way rental. Rentals can be paid using dollars or Ultimate Rewards points. Fortunately, rates are inclusive of required taxes and fees.

When using points originating from an Ink Cash, Ink Classic, Freedom, and standard Sapphire card, you receive a value of 1 cent per point, while holders of the Sapphire Preferred, Ink Bold, and Ink Plus cards can redeem points for 1.25 cents each. As always, points can be instantly transferred from one card to another within your profile and between spouses, but not between unrelated parties. So if you have a Freedom card and an Ink Bold, you can easily transfer points from the Freedom to the Ink Bold to redeem them for any travel at the rate of 1.25 cents per point.

In my experience, this is the best way to earn a free rental car so long as you are comfortable relying on your personal auto insurance. To be sure, 1.25 cents per point is not the highest and best use of Ultimate Rewards points, but it can make sense for those who have earned their points in bonus categories of spending and for cardholders who are richer in points than in dollars. Since I wouldn’t purchase Ultimate Rewards points for 1.25 cents each, it makes sense for me to utilize them for car rentals to minimize my out-of-pocket costs for reward travel.

Starwood Preferred Guest: Holders of the Starwood Preferred Guest card from American Express can use their Starpoints for rental car rewards. A $50 off coupon from Avis or Sixt is available for 3,500 points. This value of 1.4 cents per point is probably not the best use of Starpoints compared to mileage transfers and hotel redemptions, but it can make sense for those in the enviable position of having more Starpoints than needed for other awards.

Citi ThankYou points: Like the Ultimate Rewards program, most cardholders will be able to pay for car rentals at a rate of 1 cent per point, but ThankYou Premier cardholders do even better at 1.33 cents per point. Citi appears to use the same travel provider that Chase does, which excludes one way rentals. Nevertheless, Citi cards do not have as many spending bonus programs, with the exception of the Citi Forward card which earns five points per dollar spent at restaurants as well as some bonuses for opening retail banking accounts.

US Bank Flexperks, Capital One Miles, Discover Miles, and other credit cards with fixed-value travel reimbursement programs: Each of these programs allows cardholders to redeem points for 1 cent each as a statement credit towards any travel expense, including car rentals. Since some of these programs offer double points/miles for purchases, you can receive a reasonable two cents in value per dollar spent. And since you are only claiming the expense after the rental period concludes, you can still take advantage of your credit card’s insurance benefits.

Using Airline Miles for Rental Car Awards

A few airlines in the United States currently offer rental car rewards.

American: Rental car awards are available from various agencies. AAdvantage points seem to have .5-.75 cents in value for most redemptions.

Delta: Delta claims to offer car rental awards at its SkyMiles Marketplace which is only accessible to Diamond, Platinum, and Gold Medallion Members & Delta SkyMiles credit cardholders. I was able to find rental car offers that appeared to return between .5 and .75 cents per SkyMile.

Frontier: Allows rental car redemptions from their Rapid Rewards program. A day with Avis is 7,500 miles. Hertz offers a full-size car for three weekend days for 15,000 miles, and a weekly rental for 40,000 (excluding New York Tri-State Metropolitan area, Alaska or Hawaii). National offers a mid-size for two days at 10,000 miles and 35,000 per week (excluding Manhattan). Since you can top off your Frontier account using Membership Rewards points, the Hertz and National options can make sense if you are paying more than $50 per day for the equivalent rental. It is also a great way to dispose of unused Frontier miles.

United: Car rental awards were once offered to Premier members and holders of their co-branded credit cards like the United Explorer. Previous reports showed that rentals started at 10,000 per day. I was able to find cars that returned a value of approximately .5 to .75 cents per mile, in line with the Delta SkyMiles Marketplace.

Airtran, Alaska, JetBlue, Spirit, Southwest, US Airways, and Virgin America allhave no way to redeem their points and miles for rental car awards at this time.

INSURANCE ISSUES

American Express Car Rental Protection

Most savvy renters rely on their credit card to offer rental car insurance. But what few people realize is that the rental must be paid with their credit card in order to be covered. Therefore, cars rented with awards are not covered by your credit card, even if you use it to guarantee the rental or to pay taxes and fees. This is also true of American Express’s optional Premium Rental Car Insurance policy, so do not expect it to cover award rentals.

This leaves renters two options: First, they can purchase insurance from their rental car company. Sadly, these policies offer terrible value and can even be more expensive than the base rate of the rental itself. Your other option is to rely on an insurance policy you have purchased for your personal vehicle as these policies may cover damage to rental cars. Unfortunately, they are unlikely to cover rentals outside of the United States. My State Farm agent told me that I was covered for all rentals in the United States so long as the vehicle had “four wheels and two axels.” Be sure to check with your insurance company and get a written copy of the policy and any exclusions.

Conclusions

Among rental car programs Avis is the only one with a sign-up bonus and a special offer for the first 90 days. Despite its apparent sophistication, the Hertz program ends up conferring similar values to other programs that feature 1 free day per 15-16 rental days. However, the Hertz program can be attractive to those who earn 5% cash back through the American Express OPEN program by renting cars with cards such as the Premier Rewards Gold, the Starwood Business card, the SimplyCash Business card, or any of their 13 different business cards that are part of the OPEN savings program. Finally, National’s program would work best for people who rent frequently and for shorter periods of time since credits are earned per rental, not per day.

With credit card programs, Chase’s Ultimate Rewards is the leader due to the ease of earning multiple points per dollar with many of their cards. Citi’s similar ThankYou point redemption program offers slightly more value per point, but their points are harder to accrue at favorable rates. Finally, renting a car using airline miles tends to be a low-value option compared with most flight awards, with the possible exception of Frontier’s Rapid Rewards program.

Earning a rental car award will never offer as much value as free hotel night in a luxury hotel or an international business class ticket, but it is the best way to reduce the cost of your travel once already have your flights and hotels covered.

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